Australian coking coal exports falling: Macquarie

Australian coking coal exports have fallen in May compared with the prior two months as miners struggle to return to normal output after the flooding in Queensland, Macquarie Equities says.

The broker said the annualised production rate was 128 million tonnes in May, versus 142 million tonnes in March and 135 million tonnes in April. Overall, the May figure was 20 per cent below the 2010 monthly average.

“Some mining pits are still waterlogged and a lack of stockpiles at mines and ports have caused problems for coal blending to meet contract specifications," analyst Colin Hamilton said.

“We do see levels recovering in the third quarter, however, port loader maintenance at Hay Point and the potential for prolonged strikes at [BHP Billiton Mitsubishi Alliance] mines means the market will still be short of Queensland coal –- this is likely to keep the premium end of the [coking] coal suite very tight."

Mr Hamilton said the fall in Australian coking coal exports could not be made up by other regions, even though US miners have been exporting record levels of coal.

He added that Indian steel mills, which are particularly reliant on Australian products, had been forced to cut deeper into their stockpiles than Japanese steel makers that were able to source product from North America.

“Exports from the US and Canada more than made up for the Australian losses [in Japan] and show that the Japanese are distinctly trying to diversify their supply base given the ongoing supply shock in the market," Mr Hamilton said. “European mills were the big losers, with much of their usual US supply going to Japan."

He said China’s ability to swing from a net importer to a net exporter of coking coal this year had helped save the global market from an even deeper supply deficit.